Huma Siraj
Bitcoin and other cryptocurrencies are currently part of the global financial system.
Many people, companies, and even governments are subject to price swings in this infamously erratic market. But what if the technology underlying cryptocurrencies is rendered outdated by quantum computing, potentially wiping out trillions of dollars in value? Could everything fall apart in an instant?
According to some scientists, that is the danger that comes with quantum computing. These futuristic devices execute some kinds of calculations much quicker than even the most potent supercomputers by utilizing the peculiar characteristics of quantum mechanics. In the future, the cryptographic underpinnings of blockchain systems like Bitcoin might be compromised by quantum computers with sufficient power.
How serious is this threat, then? Is crypto coming to an end or is a new age in post-quantum security beginning?
The Quantum Threat: Bitcoin’s Ticking Time Bomb
A projected 500 million people owned Bitcoin or other cryptocurrencies at the beginning of 2024, a 34% rise from the previous year. Most of the holders live in North America and Asia. These assets frequently make up a sizeable amount of either national reserves or individual wealth.
There might be dire repercussions if a technology advancement made these assets vulnerable.
The way cryptocurrencies work is by making sure that the blockchain ledger can only be altered by authorized people. This implies that a specific quantity of Bitcoin can only be spent by someone who has the right private key.
Currently, Bitcoin verifies ownership and authorizes transactions using cryptographic techniques like Schnorr signatures and the Elliptic Curve Digital Signature Algorithm (ECDSA). The difficulty of determining a private key from a public key a process that is computationally impossible for traditional computers is the foundation of these systems.
Due to this impossibility, “brute-force” attacks which attempt every key are not feasible. It could take millions of years for classical computers to test every hypothesis one at a time.
However, Quantum computers work on distinct principles. They are able to carry out numerous computations in parallel because of phenomena like superposition and entanglement. Mathematician Peter Shor created a quantum algorithm in 1994 that can factor big numbers tenfold more quickly than traditional techniques. If executed on a quantum computer with enough processing power, this method could compromise encryption protocols such as ECDSA.
Quantum Counter-Measures: Saving Bitcoin Before It’s Too Late
How quantum and conventional computers manage data is where the main distinction can be found. Data is processed by classical computers as binary numbers, or bits, which can be either 0s or 1s. The building components of quantum computers, known as qubits, can exist in several states simultaneously.
According to estimates, it would need a machine with 10 million to 300 million fault-tolerant qubits to crack Bitcoin’s ECDSA encryption by 2024, even though the most sophisticated quantum computers can process about 1,000 qubits. This objective is still years or perhaps decades away.
However, technological advancements are frequently unpredictable, particularly in light of the recent acceleration of research and development in a variety of domains, including quantum computing, by AI tools.
For this reason, efforts to develop post-quantum (or quantum-safe) cryptography are already well advanced. In order to defend not only cryptocurrencies but the entire digital ecosystem, including banking systems and secret government data. The National Institute of Standards and Technology (NIST) is immune to quantum attacks.
Blockchains like Bitcoin may be able to adjust once quantum-safe protocols are implemented. A worldwide development community oversees Bitcoin’s open-source software, which has well-defined governance procedures for applying upgrades. Put differently, Bitcoin is dynamic and can adapt to new threats.
Is This the Fall of Bitcoin?
Will Bitcoin be destroyed by quantum computing? Theoretically, Bitcoin’s value would drastically decrease if it didn’t adjust and quantum computers suddenly had the capacity to decrypt it.
However, this scenario makes the improbable assumption that encryption will remain stagnant while quantum computing develops. There are strong financial incentives to maintain the integrity of Bitcoin, and the cryptography community is already getting ready.
Furthermore, the ramifications would go much beyond Bitcoin if quantum computers were able to crack existing encryption techniques. Encryption is essential for national security, digital identities, safe communications, and financial transactions. The demise of Bitcoin would be only one crisis in such a world.
Both the quantum threat and the efforts to stop it are real.
I therefore cannot promise that you will become wealthy like the millions of others who have a small amount of Bitcoin stashed away in the hopes that it would one day make you wealthy. However, I do not believe that it will soon become worthless due to quantum computing.
